Question 2 Carol Garcia, 3 recent graduate of Golden University's accounting program, evaluated the operating performance of Splish Company's six divisions. Carol made the following presentation to Splish's board of directors and suggested the Erie division be eliminated. \"If the Erie division is eliminated,\" she said, "our total prots would increase by $24,300.\" The Other Five Divisions Erie Division Total Sales $1,663,500 $100,100 $1,763,600 Cost of goods sold 977,400 76,300 1,053,700 Gross prot 686,100 23,800 709,900 Operating expenses 529,000 48,100 577,100 Net income $157,100 $(24,300) $ 132,800 In the Erie division, the cost of goods sold is $60,900 variable and $15,400 xed, and operating expenses are $14,500 variable and $33,600 xed. None of the Erie division's xed costs will be eliminated if the division is discontinued. Is Carol right about eliminating the Erie Division? Prepare a schedule to support your answer. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Net Income Increase Continue Eliminate (Decrease) $ $ $ $ $ $ Carol isQuestion 4 Sandra Robinson recently opened her own basket-weaving studio. She sells nished baskets in addition to the raw materials needed by customers to weave baskets of their own. Sandra has put together a variety of raw material kits, with each kit including materials at various stages of completion. Unfortunately, because of space limitations, Sandra is unable to carry all the varieties of kits she originally assembled and must choose between two basic packages. The basic introductory kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Sandra $14 and sells for $28. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit, the customer only has to soak the reeds and weave the basket. Sandra is able to produce the second kit by using the basic materials included in the rst kit and adding onehalf hour of her own time, which she values at $20 per hour. The kit of dyed and cut reeds sells for $35. Prepare an incremental analysis. (If an amount reduces the net income then enter with a negative sign preceding the number eg. -15,000 or parenthesis, e3. (15,000).) Process Net Income Sell Further Increase Basic Kit Stage 2 Kit (Decrease) Per unit selling price $ $ $ Costs: Materials Labour Total costs $ $ Incremental revenue Determine whether Sandra's basket-weaving shop should carry the basic introductory kit with undyed and uncut reeds or the Stage 2 kit with reeds already dyed and cut. Sandra's basket-weaving studio v carry the Stage 2 kits